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India Strategy: Margin Recovery Plays

The margins of Jefferies’ coverage universe in India will likely bottom in FY23, and we expect FY24 EBITDA margins will be up 200+ basis points year-over-year with broad-based substantial margin improvement excluding IT, metals & chemicals. We identify 12 stock picks with strong margin trend over FY23-24: Maruti, TVS, Eicher, Thermax, Adani Ports, Bharti Airtel, Biocon, Cipla, DLF, Lodha, GCPL and Indian Hotels. Jefferies expects the only sector with FY24 margins still lower than FY20 (pre-pandemic) to be IT, staples & cement.

Mahesh Nandurkar, Head of India Research